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Refresher on NEW YORK STATE RESIDENT INCOME TAX

Refresher on NEW YORK STATE RESIDENT INCOME TAX. Computation of Taxable Income New York State Credits Sales Tax, Star Rebates TaxWise Tips E-filing NYS Based on NY-3 Training slides Edited for NY-4 Geneva workshop. November 2008 Geneva Instructors’ Workshop. NEW YORK STATE TAX RETURNS.

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Refresher on NEW YORK STATE RESIDENT INCOME TAX

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  1. Refresher onNEW YORK STATE RESIDENT INCOME TAX • Computation of Taxable Income • New York State Credits • Sales Tax, Star Rebates • TaxWise Tips • E-filing NYS Based on NY-3 Trainingslides Edited for NY-4 Geneva workshop November 2008 Geneva Instructors’ Workshop

  2. NEW YORK STATE TAX RETURNS This presentation applies to full-year resident tax returns. REF. NYS PUB 80; IT-201 INSTRUCTIONS NY-3 NYS TRAINING

  3. NYS FILING REQUIREMENTS You must file a NYS return if you Are required to file a federal return, or If your Federal AGI plus NYS additions is $4,000* or more, or You WANT to claim a REFUND or CREDIT *$3,000 if claimed as a dependent NY-3 NYS TRAINING - 2008

  4. NEW YORK STATE INCOME TAX FLOW Based on Federal Return Federal AGI plus NYS Additions minus NYS Subtractions = NYS AGI NYS AGI minus Deductions minus Exemptions = Taxable Income Taxable Income -> (tax tables) -> Tax on Income Tax - non-refundable credits + designated contributions + sales tax = Total tax (not less than zero) Total Tax – refundable credits – payments = Tax due or refund NY-3 NYS TRAINING - 2008

  5. Common Additions • Mandatory contributions to state 414H retirement plan (Coded as 414HSUB in box 14 of W2) • Interest on non-NY municipal bonds or funds November 2008 Geneva Instructors’ Workshop

  6. Common Retirement Subtractions Retirement distributions received after age 59-1/2 from Private Pensions, non-NY government pensions, IRAs or other qualified plans. - $20,000 maximum exclusion per Taxpayer Retirement distributions from Federal, New York State, and Local Government Pensions – no limit Railroad retirement pension – no limit Social Security Income – no limit NY-3 NYS TRAINING - 2008

  7. Other common subtractions • Income tax refunds included as income • Interest on Treasury Debt Instruments – no limit • Contributions to NYS 529 college savings plan ($5000 max; $10,000 MFJ) November 2008 Geneva Instructors’ Workshop

  8. “Qualified” Retirement Income • To qualify for the exclusion, the income must be based on employment • Pension, IRA, 401(k), 403(b), 457 • Commercial annuities funded from savings are not qualified • If beneficiary, see special rules • Age that deceased would have been • Multiple beneficiaries also split the $20K limit November 2008 Geneva Instructors’ Workshop

  9. PENSION INCOME EXCLUSION IN TAXWISE1099R SCREEN • Check Box 1 For Private Pension NY-3 NYS TRAINING - 2008

  10. PENSION INCOME EXCLUSION IN TAXWISE1099R SCREEN • CheckBox 2 For Public Pension NY-3 NYS TRAINING - 2008

  11. PENSION INCOME EXCLUSION IN TAXWISE1099Rscreen • Check Box 4 For RR Retirement NY-3 NYS TRAINING - 2008

  12. Deductions and exemptions • If taxpayer itemized on federal, may either itemize or take standard deduction on state • Must adjust federal itemized number to subtract out any income tax deduction • If taxpayer did not itemized on federal, must take standard deduction on state • No personal exemptions • Dependent exemptions are $1,000 each November 2008 Geneva Instructors’ Workshop

  13. NYS STANDARD DEDUCTIONS SINGLE (Dependent) SINGLE MARRIED – JOINT MARRIED – SEPARATE HEAD HOUSEHOLD QUALIFYING WIDOW(ER) $3,000 $7,500 $15,000 $7,500 $10,500 $15,000 NY-3 NYS TRAINING - 2008

  14. NY State Credits Is it really free money? • Some credits are refundable • Some credits are non-refundable • Use it or loose it • Use it or carry it forward • Some credits offset others • Some credits are for full-time residents only November 2008 Geneva Instructors’ Workshop

  15. NY State Credits How do I do it? • Some credits require separate forms • Some credits require an IT-201-ATT • Some credits may be filed alone • Some credits may not be e-filed • TaxWise limitations (e.g. IT-250) • NYS limitations (e.g. IT-253) November 2008 Geneva Instructors’ Workshop

  16. Review of selected NY Credits • Credits most likely to be encountered by volunteer preparers not in NYC • Listed in numerical form order November 2008 Geneva Instructors’ Workshop

  17. IT-112RResident Credit • Credit for taxes paid to another state, locality, or DC on income which is also taxed by New York. • Form 112-C is equivalent for Canada • Non-refundable • Training required at local level for nearby states to be in scope November 2008 Geneva Instructors’ Workshop

  18. IT-201 (line 40)Household Credit • Non-refundable credit based on AGI, filing status, and size of household • Automatically calculated or use table in instructions November 2008 Geneva Instructors’ Workshop

  19. IT-209Non-custodial Earned Income Credit • Special EIC for a parent who ... • Doesn’t get the regular EIC because their child does not live with them, and • Is being forced to pay child support through a Support Collection Unit*, and • Is current on the payments *NYS Office of Temporary and Disability Assistance will “automatically” certify to NYS Income Tax November 2008 Geneva Instructors’ Workshop

  20. Non-custodial Earned Income Credit(continued) • Qualifications similar to EIC plus ... • Ordered to pay Child Support through a support collection unit • For at least ½ year • Must be up-to-date • Taxpayer at least 18 yrs of age • Qualifying Child Must be under 18 • Qualifying child cannot have lived with taxpayer • Additional Credit available to NYC taxpayers

  21. Non-custodial Earned Income Credit(continued) • Credit is: • 20% of Fed EIC that would have been allowed if the child lived with you, or • 25% of Fed EIC allowed for no Qualifying children, whichever is greater • Refundable credit

  22. IT-213Empire State Child Credit • NY version of the federal child credit • Full Year Resident NYS • Must have Federal Child Tax Credit • NYS Qualifying Child, Age 4-16 • Refundable credit is greater of: • 33% of Fed Credit for NYS Qualifying child • $100 per Qualifying Child

  23. IT-214REAL PROPERTY TAX CREDIT • Refundable Credit • Available to owners or renters • Property Must Be Subject to RealEstate Tax • Household income L/E $18,000

  24. Household IncomeCriteria • Household income must be <= $18,000 • Includes everyone living in household • Includes cash welfare, grants, etc • Includes non-taxable portion of pensions, IRAs, etc • Includes social security less Medicare deductions November 2008 Geneva Instructors’ Workshop

  25. HOUSEHOLD INCOME TEST

  26. Credit for renters

  27. Credit for owners • FMV of property must not exceed $85,000 • Credit is based on property taxes paid, or optionally based on taxes paid plus property taxes not paid due to senior exemption November 2008 Geneva Instructors’ Workshop

  28. Credit for owners • Calculate with and without Exemption And Use Larger Credit

  29. Calculating the taxes not paid • For each tax ... • Calculate the reduction in assessed value due to senior exemption for that tax type • Multiply reduction by tax rate • Following example shows a simple case November 2008 Geneva Instructors’ Workshop

  30. Example – part 1 • Full Market Value $75,551 • Assessed Value $30,500 • Aged CTS $6,125 (20%) • Sr STAR $20,190 (66%)

  31. Example – part 2 (town) • Assessed Value $30,500 • Aged CTS Exemption $6,125 • Town Taxable Value $24,375 • Town Tax Rate $23.17 per $1000 • Town Tax Exempted for 65 Yr Old $6,125*23.17/1000=$141.92

  32. Example – part 3 (fire) • Assessed Value $30,500 • Aged CTS Exemption $6,125 • Fire Dist Taxable Value $30,500 • Fire Dist Tax Rate $5.53 per $1000 • Fire Dist Tax Exempted= $0.00*5.53/1000=$0.00

  33. Example - summary • Town Tax Paid (inc fire) $734 • School Tax Paid (?) $230 • Total Tax Paid $964 • Town Tax Exempted $142 • School Tax Exempted (?) $330 • Total Tax Exempted $472

  34. OWNERS CREDIT • Credit with exemption $179 • Credit without exemption $122

  35. Beware of multiple exemptions November 2008 Geneva Instructors’ Workshop

  36. And sometimes it doesn’t matter because the credit is limited November 2008 Geneva Instructors’ Workshop

  37. IT-215Earned Income Credit (regular) • Form IT-215 • 30% OF FEDERAL CREDIT • Automatic in Taxwise • Additional Credit available to NYC taxpayers • Refundable Credit

  38. IT-216Child and Dependent Care • Flows from information on Federal form 2441 • Credit is 20% to 110% of potential federal credit • New York Credit is refundable • Make sure IT-216 is present even if Federal 2441 is not. November 2008 Geneva Instructors’ Workshop

  39. IT-245Volunteer Firefighter and Ambulance Worker Credit • Refundable credit • Full year residents only • $200 per volunteer • $400 if MFJ and both volunteer • Must be active for entire year • Cannot claim credit if: • Real Property Tax Exemption for volunteer service

  40. IT-249Long Term Care Insurance Credit • Credit of 20% of actual cost of long term care insurance • Cost is not limited by federal caps • Credit is non-refundable, but may be carried forward if not used • TaxWise will calculate automatically if premiums are entered using 1040 Schedule A detail worksheet

  41. 1040 Schedule A Detail Worksheet Total LT Care Ins Cost

  42. IT-250External Defibrillator Credit • Non-refundable Credit • Credit = Cost up to $500/unit • Multiple Purchases Allowed, but not for resale. Problem – TaxWise does not have form IT-250

  43. IT-250External Defibrillator Credit • Taxwise – no Form IT-250 • Go to IT-201A, Section B: • Enter code 250 and correct amount. • Program takes it from there.

  44. Don’t do this ! Defibrillator Cost

  45. How to file an IT-250 • Find an IT-250 form somewhere • Fill it in manually • Put the credit number and cost on the correct line of the IT-201-ATT • Print out the NY return (don’t forget IT-2 and IT-1099-R if needed) • Mail it in November 2008 Geneva Instructors’ Workshop

  46. IT-258Nursing Home Assessment Credit • Refundable Credit for Assessment charged to Nursing Home by state – passed on to resident • Must be separately stated on bill to resident • Must be paid out-of-pocket • Credit goes to person or persons who paid charge

  47. IT-272College Tuition Credit • Refundable credit or itemized deduction for qualified undergraduate tuition and fees ($10K per student max) • Does not have to be full time • Does not have to be degree program • Taxpayer, spouse or dependent November 2008 Geneva Instructors’ Workshop

  48. TaxWise tip - HOPE names carry, Lifetime do not

  49. Tuition Credit Option • Credit based on total qualified expenses for all students ($10K max each) • Expenses less than $200 - full credit • Expensesbetween $200 and $5,000 - $200 credit • Expenses over $5,000 – 4% credit ($400 max) November 2008 Geneva Instructors’ Workshop

  50. Tuition Itemized Deduction Option • Allows tuition to be deducted on NYS form • Must have itemized on federal return • May deduct qualified expenses for all students ($10K total max) • Which is better – credit or deduction ?? November 2008 Geneva Instructors’ Workshop

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